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Morning Markets: Wheat continues to slide as row crops rally

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There was mixed trading Monday as supply/demand fundamentals point to supply driving markets over the next marketing year. Wheat continued to fall below $5/bushel while corn and soya both strengthened on the day. Traders are poised for tomorrow’s USDA August WASDE report to quantify the trends.

 

Yesterday, funds were net buyers in 9 000 lots of corn and 8 500 lots of soybean. They were net sellers in 4 500 lots of wheat.

 

US wheat futures continued to lose ground in Monday’s trading, with the September Chicago SRW contract closing the day at $4.91 a bushel, having opened at $4.95½/bu. However, early Tuesday trading saw the position rally to $4.93½/bu.

 

In Europe, the Paris September wheat contract lost €1 to finish at €177/tonne.

 

Analysts note that US wheat in Chicago fell as it becomes clear all the main exporting regions save Europe have harvested, or have the potential of, large crops. While EU prices might be expected to harden on lower than average production, upward revision of yields in the Black Sea and Russia added to the pressure for EU values.

 

New GASC wheat tender

 

Egypt’s GASC has launched another soft wheat tender for shipments between September 25th to October 5th.

 

“Wheat futures prices continued to fall,” observed Commonwealth Bank of Australia analyst Tobin Gorey. “Kansas and Paris prices fell modestly. Chicago had a sharper fall to continue their belated tumble towards other prices. The sounds of a larger Russian wheat crop have now reached Chicago as well.

 

“That pricing likely keeps US exports elevated, but that needs to continue if inventories are going to get to a comfortable place.”

 

Lael Weselmann at Benson Quin added: “Wheat still struggles to find a positive catalyst. Russian, Australian and record Canadian crops offsetting declines for the EU and Argentina, keeping global wheat production numbers from declining enough to support prices.”

 

The CBOT September corn futures opened Monday’s business at $307¾/bu and ended it at $3.10½/bu. Early Tuesday trades were at $3.13½/bu.

 

The Paris maize September futures lost €1 over Monday to end the day at €163.50/tonne.

 

French corn under hydric stress

 

French analyst Agritel said corn in France continues to suffer from hydric stress, but competition will be stiff by the autumn due to ample Ukrainian supplies. China is reported to have officially suspended its E10 biofuels inclusion in transport fuels legislation, owing to Covid-19 demand destruction, reduced Chinese stocks and a lack of industrial capacity.

 

“Corn futures prices were little changed on Monday,” commented Mr Gorey. “Prices remain at, or a sliver above, season lows. Corn crop conditions were 71% good to excellent - down just a percentage point from last week, the drop is probably not enough to lift the gloom in the corn market.”

 

Mr Weselmann said corn values had found some support from “lacklustre rains in dry sections of Iowa over the weekend, that may have triggered some short covering from recent low values”. But heavier rain forecasts in the region could weigh on futures values. “Talk China was also selling off older rice and wheat stocks for feed purposes, also added to resistance.”

 

Chicago’s August soybean futures rallied from the week’s opening $8.70¼/bu low to close Monday at $877/bu. However, early Tuesday trades were down marginally to $8.76½/bu.

 

The Paris rapeseed futures fell to €375/tonne from the opening €377.25/tonne.

 

The US sold 588 000 tonnes of soybeans to China and 110 000 tonnes to unknown destinations.

 

Palm stocks lowest for three years

 

Agritel reported Malaysian palm stocks at their lowest for last the three years at 1.7 million tonnes, which is strengthening palm oil prices. “The veg oil market remains buoyant mainly due to a high demand from China. Crushing margins in Asia are currently quite positive for the local operators. This context did not help the rapeseed, still weakened by a bearish chartist context,” it said.

 

Mr Gorey noted mixed oilseeds trading on Monday. “Soybean prices made modest gains on USDA reports of a slew of large soybean export sales, principally, if not entirely to China. US$ canola prices were unchanged to remain just a dash below recent highs.”

 

“Talk was China also shopping for another 700+ MT of new crop beans also added a supportive piece to the trade today,” observed Mr Weselmann. “China could remain active in the beans space in front of the August 15th meeting with the USTR.”

 

 

 

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